When companies or trade associations enter into agreements with each other—such as price-fixing, market sharing, or customer allocation that restrict,
prevent, or distort competition, this is considered a cartel. Cartels are prohibited because they are harmful to consumers, other businesses, and the economy as a whole.

Below, you can read how to recognize cartels and which types of agreements fall under the cartel prohibition.

What is the cartel prohibition?

The cartel prohibition prohibits agreements between companies or business associations that noticeably restrict, prevent, or distort competition in the Aruban market. This applies to:

• Agreements between companies.
• Decisions of business associations.
• Concerted practices.

This also includes oral, tacit, or informal arrangements, such as a gentlemen’s agreement. Even if companies align their market behavior without an explicit agreement, this may still constitute a prohibited cartel.

Some agreements violate the cartel prohibition and are prohibited in all cases, regardless of whether they actually restrict competition. These practices fall under the so-called “per se” prohibitions.

The Competition Ordinance provides for four types of per se prohibited practices.

 

Price-fixing

Agreements on selling prices or other sales conditions are prohibited.
Price-fixing may occur for example, in the following situations:

• Companies coordinate price increases with each other.
• A trade association advises its members on prices.
• Competitors consult with each other about discount campaigns.

Such agreements lead to higher prices and harm consumers.

These types of agreements are classified as “per se” prohibited, for which no exemption is possible.

 

Market allocation

Companies are not allowed to divide the market among themselves. This includes agreements on, for example:

• Which customers or geographic region each company will serve.

• Referring customers to another supplier.

• “Dividing or allocating” customers in order to avoid conflicts.

Market allocation restricts consumer freedom of choice and competition.

These types of agreements are classified as “per se” prohibited, for which no exemption is possible.

 

Bid-rigging in public procurement

In public procurement procedures, bid-rigging may occur. Companies are not allowed to make mutual agreements about who will be awarded the contract or to make agreements to determine bid prices.

Bid-rigging may occur for example, in the following situations:

• Bids are coordinated in advance or are identical.

• Companies agree on whose “turn” it is to win a contract.

• One or more companies deliberately submit non-competitive or unattractive bids.

• Companies divide contracts geographically or agree on which company may win which contract.

Such agreements reduce or eliminate competition and lead to higher costs for contracting authorities and taxpayers. Bid-rigging is a hardcore cartel practice that is always forbidden under of the cartel prohibition.

These types of agreements are classified as “per se” prohibited, for which no exemption is possible.

 

Agreements on production limitation

Competitors are not allowed to make agreements to:

• Reduce production.
• Temporarily suspend production.
• Stop supplying certain customers.

Such agreements artificially restrict supply and drive up prices, which is detrimental to purchasers and consumers.

These types of agreements are classified as “per se” prohibited, for which no exemption is possible.

 

Exchange of Information

The exchange of competitively sensitive information between companies may also fall under the cartel prohibition, particularly where it leads to coordinated market behavior. This includes the exchange of information, for example:

• Future prices or planned price increases.
• Production or supply strategies.
• customer or market data.

Depending on the circumstances, such information exchange can restrict competition and may fall under the cartel prohibition, especially if it leads to coordinated market behavior.

 

Exceptions to the cartel prohibition

Not all agreements between companies are prohibited. Competition law provides for certain legal exceptions. However, agreements that are per se prohibited, such as price-fixing or market allocation, are always prohibited. The following exceptions may apply:

• De Minimis Rule
  Agreements that would normally fall under the cartel prohibition are permitted if the combined market share, of the companies involved, does not exceed 25%.

• Applying for an Exemption
  If an agreement restricts competition but results in economic or technical advantages that also benefit consumers, an application for an exemption may be submitted to AFTA. This does not apply to agreements that fall under the per se prohibitions. An exemption is granted only if four cumulative conditions are met.

Contact AFTA if you wish to apply for an exemption from the cartel prohibition.

 

Block exemption

By national decree, certain categories of agreements may be granted a collective exemption. Currently, no block exemptions are in force in Aruba.

 

Specific exceptions

• Collective Labour Agreements
  Agreements on employment conditions in collective labor agreements (CLA/CAO) between employees’ and employers’ organizations do not fall under the cartel prohibition.

• Services of General Economic Interest
  Where a company is legally entrusted with a public service obligation, and an agreement is necessary for carrying out that obligation, the cartel prohibition may not apply.

 

Do you see signs of cartel agreements?

If you suspect that companies are making prohibited agreements, you can contact AFTA. Reports can be submitted anonymously.

Have you, as a company, made a mistake and want to rectify it? Please contact us confidentially for consultation. Submit your report here.

 

Sources:

• Article 2.1 CO (cartels)
• Article 2.2 CO (de minimis rule)
• Article 2.3 CO (exemption)
• Article 2.4 CO (block exemptions)
• Article 2.5 CO (collective labour agreements)
• Article 2.6 CO (services of general economic interest)